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FRM Part II · FRM Exam Part II · Case Study: Cyberthreats and Information Security Risks

After a major breach, a post-incident review finds that security alerts had fired for weeks but were not escalated because the monitoring team treated them as routine noise and no one owned follow-up. Which root cause best describes this control failure?

The root cause is weak detection and response governance. The alerts fired, but unclear ownership and no escalation path meant nobody acted on them. This is a process and accountability failure rather than a technology gap, so fixing it requires defined roles and escalation procedures.

  1. AWeak detection and response governance, including unclear ownership and escalation of alertsCorrect
  2. BInsufficient capital allocated for operational risk under the standardized approach
  3. CExcessive reliance on encryption of data at rest
  4. DOverly strict password complexity rules

Explanation

The technical alerts worked; the failure was in process and accountability for acting on them. Encryption and password rules do not address missing escalation. Capital is a loss absorber, not a cause of the failure.

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